Royal Lonexecute n eyes oil explorers

By Alex Lawler

LONDON (Reuters) - Oil exploration and production firms offer better gearing than majors BP and Royal Dutch Shell to an oil price unlikely to head lower, a Royal Lonexecute n Asset Management money manager said.

Ivor Pether, a senior fund manager who aid s manage 6.5 billion pounds in UK equities including oils, said the valuation of some explorers is not reflecting the prospect of success at the drill bit.

"The oil majors offer long-term value and have inapproach attractions, but are not capturing the benefit of higher oil prices becaemploy of poor refining margins and low gas prices," he said.

"Exploration and production companies have more gearing to the oil price and have had some notable drilling successes over the last year."

Tullow Oil (TLW.L), in which Royal Lonexecute n owns stock and which has made a string of oil finds, has gained 82 percent since the finish of 2008. Shell (RDSa.L) has drop en 2 percent and BP (BP.L) has climbed 2.5 percent.

Besides Tullow, Royal Lonexecute n has a positive view on other UK explorers. It hfeeble s oil stocks in a range of its UK equity funds.

"Premier (PMO.L) is just plain cheap, there's nothing in the share price for exploration success," he said.

"We also hfeeble Dana (DNX.L) and Cairn (CNE.L). Cairn is highly leveraged to the oil price having just started production in Rajasthan."  Continued...